Impacts of the Russian-Ukrainian War on the Azerbaijan Economy

Impacts of the Russian-Ukrainian War on the Azerbaijan Economy

By Vugar Bayramov, Member of the Parliament of Azerbaijan

Major questions are followings; will the Russian-Ukrainian War have any impact on the Azerbaijani economy? What does Azerbaijan buy from these countries and what do sell to them?

 In 2020, the total trade turnover between Azerbaijan and Ukraine amounted to $ 771.5 million. During the year, Azerbaijan imported goods worth $ 418.455 million from Ukraine, and products worth $ 353.45 million were exported to this country.

 As for the structure of goods imported from Ukraine to Azerbaijan, tobacco ($ 47 million 779 thousand), beef ($ 27 million 992 thousand), cigarettes ($ 22 million 165 thousand), poultry and its by-products ($ 20 million 977 thousand), butter, other dairy oils and pastes ($ 19 million 949 thousand), medicines ($ 16 million 713 thousand), hot rolled steel ($ 11 million 789 thousand), live cattle ($ 8 million 930 thousand), chocolate and chocolate products (7 million 553 thousand dollars), fresh fruit (8 million 452 thousand dollars), sugar confectionery (7 million 734 thousand dollars), bread, bakery products (7 million 677 thousand dollars), margarine, other useful food mixtures (6 million 326 thousand dollars), milk and cream (4 million 310 thousand dollars), etc. more prevalent.

 During the year, Ukraine received more fresh fruit ($ 9,353,000), kerosene for jet engines ($ 3,210,000), fresh vegetables ($ 2,167,000), lubricants ($ 1,726,000), fruit and vegetable juices ($ 421,000), etc from Azerbaijan.

 The total annual trade turnover between Azerbaijan and Russia was $ 2.671 billion. Azerbaijan imported from Russia goods and services with  value of $ 1 billion 962 million and export to Russia was $ 709 million 390 thousand

 Azerbaijan imported from Russia wheat (293 million 234 thousand dollars), long-cut forest materials (100 million 35 thousand dollars), mineral fertilizers (79 million 223 thousand dollars), hot rolled steel (55 million 843 thousand dollars), chocolate and chocolate products (47 million 603 thousand dollars), vegetable oils (46 million 162 thousand dollars), television receivers (44 million 473 thousand dollars), glued plywood (28 million 45 thousand dollars), medicines (27 million 585 thousand dollars), washing machines (23 million 586 thousand dollars), potatoes (23 million 515 thousand dollars), bread, bakery products (22 million 611 thousand dollars), wood chips (22 million 399 thousand dollars), margarine, other edible mixtures (20 million 610 thousand dollars), synthetic detergents (17 million 438 thousand dollars), wood fiber boards (15 million 436 thousand dollars), lubricants (15 million 68 thousand dollars), sugar confectionery (13 million 787 thousand dollars), minerals and carbonated water (12 million 464 thousand dollars), paper and card from it sanitary-hygienic products (11 million 311 thousand dollars), etc. products from Russia.

Azerbaijan exported fresh fruits ($ 274 million 832 thousand), fresh vegetables ($ 214 million 122 thousand), potatoes ($ 30 million 817 thousand), electricity ($ 11 million 738 thousand), petroleum coke ($ 9 million 616 thousand) , ethylene polymers ($ 8,318,000), fruit and vegetable juices ($ 8,148,000), bentonite clay ($ 7,956,000), cotton yarn ($ 5,315,000), canned fruit and vegetables ($ 4 million) 600 thousand dollars), tobacco (3 million 427 thousand dollars), natural grape wines and grape juice (2 million 880 thousand dollars), tea (1 million 689 thousand dollars), etc. products to Russia.

The structure of imports and exports of products in both countries shows that in the event of a long-term war, our foreign trade turnover with Ukraine is expected to decline. Minimization of transport links will also affect trade cooperation between the two countries. Of course, the scale of these effects will depend on the duration of the war.

As the war did not take place in Russia, it has not yet had a significant impact on trade relations with its northern neighbor.  However, technical problems in importing goods from Russia has been already observed. But if the ruble continues to depreciate and sanctions reduce purchasing power in Russia, it could affect our non-oil exports. In this regard, it is important to diversify markets, especially by increasing exports of agricultural products to new markets, including the Gulf and the European Union. Diversification of export markets is also relevant in terms of minimizing the effects of external shocks.